Wall Street Sell-Off Deepens as Trump Tariff Fears Grow \ Newslooks \ Washington DC \ Mary Sidiqi \ Evening Edition \ Wall Street tumbled further Thursday as escalating trade tensions under former President Donald Trump pushed the S&P 500 into correction territory, down over 10% from its recent peak. The Dow plunged 537 points as Trump threatened steep tariffs on European alcohol. AI stocks and retail shares also fell, while Intel surged on news of a new CEO.
Wall Street’s Sharp Decline Amid Trade War: Quick Looks
- S&P 500 Hits Correction Territory: The index fell over 10% from its peak amid trade war concerns.
- Dow Drops 537 Points: Investors reacted to Trump’s latest tariff threats on European wine and alcohol.
- Nasdaq Also Declines: AI-related stocks, including Palantir (-4.8%) and Super Micro (-8%), contributed to losses.
- U.S. Economic Signals Mixed: Lower-than-expected inflation data provided some relief, but trade uncertainty loomed.
- Trump’s Trade War Escalation: He proposed 200% tariffs on Champagne and other European products.
- Bond Market Reaction: Treasury yields dropped as concerns over economic confidence grew.
- Intel Surges on CEO News: Stock jumped 14.6% after the company named Lip-Bu Tan as its new leader.
Deep Look
The U.S. stock market faced another punishing session Thursday as Wall Street’s sell-off deepened, driven largely by growing fears over trade tensions escalated by former President Donald Trump. The S&P 500 officially entered correction territory, meaning it has dropped more than 10% from its record high, which was set just last month.
The sharp market decline came after Trump announced new tariff threats, sending shockwaves through investors already on edge over inflation, global trade uncertainty, and fears of a potential economic slowdown.
Trump’s Trade War Escalation Rocks Markets
The latest wave of selling began after Trump threatened to impose 200% tariffs on Champagne and other European wines in response to the European Union’s decision to increase tariffs on U.S. whiskey. The European retaliation followed previous U.S. tariffs on European steel and aluminum, reigniting fears of a prolonged trade war.
The uncertainty surrounding Trump’s aggressive tariff policies has been a major source of concern for investors. Many fear that a drawn-out trade war could slow consumer spending, disrupt supply chains, and put additional pressure on businesses already struggling with economic volatility.
Stock Market Tumbles as Uncertainty Grows
The Dow Jones Industrial Average dropped 537.36 points (-1.3%), closing at 40,813.57, while the Nasdaq Composite fell 345.44 points (-2%) to 17,303.01. The S&P 500 declined 1.4%, marking its steepest drop since 2023 and officially pushing it into correction territory.
Stocks fluctuated wildly throughout the day as investors struggled to digest the impact of Trump’s latest tariff threats. The Dow swung between small gains and a 689-point drop, underscoring the extreme market volatility.
Chris Larkin, managing director of trading and investing at E-Trade from Morgan Stanley, noted that even positive economic data was overshadowed by trade tensions.
“The question for markets is whether good news on the inflation front can make itself heard above the noise of the ever-changing tariff story,” he said.
Artificial Intelligence Stocks Lead the Sell-Off
AI-related stocks, which had been among the strongest performers in recent months, took another hit.
- Palantir Technologies (-4.8%) and Super Micro Computer (-8%) suffered sharp losses, as investors continue to reassess the lofty valuations of AI-focused companies.
- Nvidia, a key driver of the AI boom, saw a volatile session, ultimately finishing with a modest 0.1% loss.
- Tesla (-3%) fell sharply, extending its year-to-date losses to over 40% in 2025.
Economic Data Offers Mixed Signals
Despite the turmoil in the markets, there was some positive economic news:
- Inflation Eases at Wholesale Level:
- A key inflation report showed that price increases at the wholesale level were milder than expected, following a similar report the day before that indicated lower inflation for U.S. consumers.
- Job Market Remains Stable:
- Fewer U.S. workers applied for unemployment benefits last week than economists anticipated, signaling that the labor market remains relatively strong.
- A resilient job market is critical for sustaining consumer spending, which is the main driver of the U.S. economy.
However, concerns remain about stagflation, a feared scenario in which economic growth slows while inflation stays high. If tariffs continue to drive up prices while also stifling demand, policymakers may have limited tools to address the issue.
Intel Jumps on CEO Announcement
One of the few bright spots on Wall Street was Intel (+14.6%), which surged after the company announced Lip-Bu Tan as its new CEO.
Tan, a veteran in the semiconductor industry and a former board member, will replace Pat Gelsinger, who unexpectedly stepped down three months ago amid Intel’s struggles to regain dominance in the chip market.
Intel’s stock rally provided a rare source of optimism in an otherwise bleak trading session, as investors hope that new leadership can turn around the company’s declining market position.
Bond Market and Global Market Reactions
- Treasury Yields Drop:
- The 10-year Treasury yield fell from 4.32% to 4.27%, reflecting increased investor demand for safer assets amid stock market volatility.
- Yields have generally declined since January when they were approaching 4.80%, as traders have lowered their expectations for future economic growth.
- Global Markets React:
- Stock indexes in Europe and Asia mostly declined, but the losses were not as severe as those in the U.S.
- Investors worldwide remain cautious as they assess the ripple effects of Trump’s unpredictable trade policies.
Investor Sentiment Turns Cautious
While few analysts are predicting an imminent recession, recent reports indicate a growing sense of uncertainty among both consumers and businesses.
- Consumer confidence has weakened, as Americans worry about the impact of tariffs on prices and economic stability.
- Businesses have reported hesitancy in spending and investment, citing the unpredictable nature of Trump’s trade policies.
As the stock market continues to react to policy changes and global economic shifts, investors are left questioning whether this downturn is a temporary correction—or the beginning of a larger economic slowdown.
Wall Street Sell-Off
